Vocab for Financial Markets Final

Vocab for Financial Markets Final - Vocab for Financial...

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Vocab for Financial Markets Final Credit Default swap - insurance for securities, if the bond you own defaults then the issuer of the CDS gets the bond and you get the principal back CLO - Collateralized loan obligation- an asset backed security that is protected by a pool of cash flows that are loan Firm Foundation Theory - each investment instrument has some type of intrinsic value Duration - a risk measure in securities—the longer the duration the more risk Distinction Between Treasury Note and Bond- the only difference is the length of the security—a note is from 1-10 years and a bond is 10+ years Money Market- under 1 year fixed securities-treasury bills, CP’s, and CD’s—this is a safe place for assets because it is short time periods PIIGS- Portugal, Italy, Ireland, Greece, Spain—countries of the EU that are about to default on their debt Prepayment Penalty- in mortgages- when you want to pay off your mortgage early through refinancing there can sometimes be a penalty to do so. Good for the lender and bad for the borrower Self-Amortizing- means you pay off interest and principal at the same times like with mortgage payments. At first you are paying mainly the interest off, but towards the end of the time period you are paying mostly principal Settlement asset - a probability distribution of returns
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This note was uploaded on 02/16/2011 for the course ECON 434 taught by Professor Staff during the Fall '08 term at UVA.

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Vocab for Financial Markets Final - Vocab for Financial...

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